THE Scottish construction sector is expected to shrink further in 2012 though growth is expected to return in 2013 according to the latest figures published by Construction Skills Network (CSN).

However CSN predicts construction employment in Scotland will grow at nearly twice the UK average between 2012 and 2016.

The annual report, compiled by CITB-Construction Skills, the Sector Skills Council and Industry Training Board, estimates output declined three per cent last year.

This was caused by weakening economic conditions in the eurozone in the second half of 2011 which led to a drop in activity across both the public and private sectors, the report states.

The outlook for 2012 is even gloomier,with the CSN report predicting output will decline by as much as five per cent as construction remains subdued - in the short term at least - across the private housing, industrial and commercial sectors.

And cuts in public sector spending are expected to result in further weakening in public housing and non housing construction.

Construction employment in Scotland is set to grow at an annual average rate of 1.1 per cent between 2012 and 2016, almost twice the 0.6 per cent rate given for the UK as a whole.

However, major transport infrastructure projects coming online in Scotland, including the new Forth Road Crossing and a major upgrade of the A9 between Perth and Inverness, are expected to lift construction employment annually by 4.7 percent.

This is expected to help lift the average annual rate of growth in the construction sector in Scotland by an average rate of 1.1 per cent between 2012 and 2016 moret han twice the growth rate predicted for the UK as a whole, put at 0.6 per cent.

Graeme Ogilvy, director for Construction Skills in Scotland, said: "This year's CSN report points towards some positive long-term growth trends compared to the rest of the UK, but it remains clear that conditions will remain challenging in the short-term, which will not be welcome news for firms and workers.

"In these challenging conditions, where youth unemployment is a particular problem, it is vital for firms to maintain a competitive edge and to continue to invest in training and apprenticeships so that they ensure they are prepared for the projected return to growth next year.

"I am pleased that the Scottish Government has committed the public sector to provide training and apprenticeship plans in public contracts.

"However, in order to boost employment prospects beyond 2012, its imperative that planned infrastructure projects start as soon as possible.

"Overall the long term picture looks promising and the construction sector has the potential to create an economic stimulus to help return the Scottish economy to growth."

The Federation of Master Builders published figures last week suggesting more than 200,000 construction jobs have been lost UK-wide since 2008.

"Crucially it also shows the substantial difference we are making in Scotland by reversing Westminster cuts over the course of this spending review, and increasing our total capital spending.

"With construction employment in Scotland projected to grow at nearly twice the UK average, there can be no doubt that is the right decision for jobs and the right decision for our economy.

"But with short term prospects remaining tough, we should also be under no illusion that the UK Government has fallen far short of providing the actions in their gift to support our economy and our construction industry.

"That is a powerful illustration that Scotland could do substantially better with full economic powers at its disposal, and urgently needs substantial borrowing powers at the very least."